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2017 (2) TMI 204 - CESTAT MUMBAI

2017 (2) TMI 204 - CESTAT MUMBAI - TMI - Reversal of cenvat credit - Suo motu credit of the CENVAT credit - Loss of stock due to fire - Interest - Penalty - Hon'ble High Court of Karnataka in the case of Motorola India Pvt. Ltd. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE] on the issue of availment of suo motu credit held as under The Tribunal, after noticing the material facts has chosen to allow the claim on the basis that the amount paid by mistake cannot be termed as duty in the .....

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plication under Section 11B of the Central Excise Act, 1944 claiming refund of duty. - Appeal allowed. - E/1872/10-MUM - A/85432/17/SMB - Dated:- 18-1-2017 - Shri M V Ravindran, Member (Judicial) Shri Mehul Jivani, Chartered Accountant for Appellant Shri V K Shastri, Assistant Commissioner (AR) for Respondent ORDER Per M V Ravindran This appeal is directed against Order-in-Appeal No. PKS/201/BEL/2010 dated 27.07.2010. 2. Heard both sides and perused the records. 3. The issue in this case is .....

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said Rules. Briefly, the fact of the case is that the appellants are engaged in the manufacture of excisable goods and on 1st February, 2005, an incidence of fire has taken place in which some of the inputs and raw materials were destroyed. The credit of ₹ 88,187/- involved on such inputs was reversed on being pointed out by the Audit Party on 14.03.2006. Since they have not paid the interest on the said amount, a show-cause notice dated 02.02.2007 was issued for recovery. The said show-ca .....

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-in-Original and allowed the appeal filed by the appellants and the departmental appeal was rejected. In pursuance to the Order of the Commissioner (Appeals), the appellants took suo motu credit of the CENVAT credit. However, the department has not accepted the said Order-in-Appeal dated 28.2.2008 and has filed an appeal before the Tribunal on 27.5.2008. A Notice was issued to the appellants for recovery of the amount of credit taken suo motu and vide the impugned order, the amount has been conf .....

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ered by the Larger Bench in the case of BDH Industries Limited whereby It was held that all types of refund to be filed under Section 11B of Central Excise Act, 1944 and no suo motu refund/credit of the duty can be taken. Similarly, the Hon'ble Tribunal in the case of Comfit Sanitary Napkins (I) Pvt. Ltd. [2004 (174) E.L.T. 220] has held that Suo motu credit cannot be taken without applying for refund. The assessee should have followed the procedure laid down under Section 11B of the Central .....

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and no such order has been passed by Commissioner (Appeals) treating the said amount as pre-deposit. 7. Further, the judgment relied upon by the appellants in the case of Jindal Vijaynagar Steel Ltd. and Bajaj Auto Ltd., are mainly on the issue of limitation and as such, not directly applicable in the case in hand. In all case laws relied upon it was seen that in all the cases refund claim was filed whereas, in the present case the appellant had not filed the refund claim, and had taken suo-motu .....

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on the basis that the amount paid by mistake cannot be termed as duty in the case on hand. The Tribunal also stated that the time bar does not apply in such cases. Somewhat in similar circumstances, the Apex Court in India Cements Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 358 has chosen to accept the case of the assessee. The Madras High Court subsequently noticing the Judgment of the Supreme Court has also chosen to hold that the claim is reasonable on the facts of this case. In th .....

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rinted paper labels are exempted from payment of duty vide Notification No.10/2003 CE dated 01.03.2003. According to the Revenue, common inputs were utilized in the manufacture of exempted items as well as dutiable items. The allegation of the Revenue is that the assessee had not maintained a separate account in respect of input services. Thus for the period from September 2004 to February 2006, there was a demand of duty at ₹ 1,29,09,931/- being 10% of the value of exempted goods cleared .....

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the entry, the assessee took service tax credit on ₹ 3,21,308/- in the Cenvat account on its own, without making a formal application. This was objected to by the Revenue by contending that the assessee should have filed a refund application as required under Section 11B of the Central Excise Act, 1944. Thus, according to the Revenue, the amount of ₹ 3,21,308/- being the ineligible service tax credit taken and utilized for payment of duty on the clearance of finished goods attracted .....

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on 11B of the Central Excise Act, 1944 relates to claim for refund of duty, which reads as under: (1) Any person claiming refund of any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the relevant date] [in such form and manner] as may be prescribed and the application sh .....

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commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 (40 of 1991), such application shall be deemed to have been made under this sub-section as amended by the Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act:] [Provided further that] the limitation of [one year] shall not apply where any [duty and interest, if any, paid on such duty] has been paid under protest. [(2) If, on receipt of any such application, .....

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tral Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) ... (b) ... (c) ... (d) ... (e) ... (f) ... ..." The objection of the Revenue herein is that even for a reversal of an entry, the assessee should have followed Section 11B of the Central Excise Act, 1944 lest there would be unjust enrichment. Consequently, there could be no such thing as suomotu reversal, except through .....

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ct, 1944 claiming refund of duty. The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle, since, what is availed off by the assessee is only a credit on the duty paid on the services rendered. Further, the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004, as there is no dispute of the fact that a sum of ₹ 3,21,308/- available as Cenvat Credit was in res .....

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under Section 11B of the Central Excise Act, 1944 and that the assessee was to comply with the provisions of Section 11B of the Act. The view of the Tribunal that the assessee should seek reversal in the appropriate judicial forum, if the assessee was aggrieved by the earlier order herein does not arise at all. 15. Even a cursory reading of the order of the Tribunal in the earlier round of litigation would show that it accepted the assessee's case of suomotu reversal of the entry. That being .....

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essee was forming part of ₹ 5,38,796/-, which was earlier reversed by the assessee. On the admitted fact, ₹ 3,21,308/- represented the enumerated input services as given under Rule 6(5) of the Cenvat Credit Rules, 2004, we have no hesitation in accepting the plea of the assessee that on a technical adjustment made, the question of unjust enrichment as a concept does not arise at all for the assessee to go by Section 11B of the Central Excise Act, 1944. 17. In the circumstances, we se .....

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